Michael Gove's decision in 2011 to axe ringfenced funding for school sport has come under renewed attack after a new survey revealed it led to a sharp drop in the number of children exercising.

A survey by the Smith Institute [see footnote] found that more than a third of primary and secondary school teachers reported a drop in participation despite the feelgood factor engendered by the London Olympics.

Only one in 10 said participation had increased after the education secretary cut £162m in funding, before a partial U-turn that funded a teacher release programme and a revamped School Games.

Over two-thirds of School Games organisers and school sport co-ordinators, working in a combined total of 3,617 schools, said that participation had declined, citing a lack of funding as the main issue.

After dedicated lobbying by teachers and sports bodies who claimed the cuts threatened to undermine any hope of using the Olympics to inspire more young people to be active, the government agreed in March to introduce a new £150m scheme aimed at primary schools.

Shadow sports minister Clive Efford said the prime minister was "failing to seize this once in a lifetime opportunity to secure a lasting Olympic legacy".

He added: "David Cameron's decision to cut funding to school sport is a disaster for our young people. Rather than building on the improvements Labour made, we've actually seen participation falling in more than one in three schools."

• This footnote was added on 31 May 2013 to show more details of the survey. It was an online online survey during which 1,019 people were surveyed: • 673 Primary school teachers • 225 Secondary school teachers • 121 SGO/SSP staff that work with a total of 3,617 schools Responses were given between 14th March and 19th April 2013. Not all respondents answered all questions.